Market equilibrium effects of incentives to foreign direct investment

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4 Citations (Scopus)

Abstract

This note shows that a country may want to give a certain type of incentive to foreign direct investment (subsidy to marginal costs of the foreign firm), even if no further gains (job creation, technology transfer and the like) are available. The crucial element is that subsidies may change the market equilibrium in a favorable way to the country.

Original languageEnglish
Pages (from-to)153-157
Number of pages5
JournalEconomics Letters
Volume44
Issue number1-2
DOIs
Publication statusPublished - 1994

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